Rishi Sunak: Experts discuss ‘rescue package’
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Treasury insiders last night confirmed the Chancellor is to deliver an “economy update” to MPs. It will focus on extra financial support for the most vulnerable. Pensioners and low-income families are expected to receive help with increased benefits that will include a significant rise in the Warm Home Discount Scheme. And Mr Sunak is also poised to signal a new tax on the profits of oil and gas firms to fund his latest spending splurge.
The Chancellor’s announcement follows a pledge from Boris Johnson last night that his government “is going to do everything we can to help people”.
But the Prime Minister also warned that the financial pressure on households will continue “for a while to come”, warning: “It won’t be easy, we won’t be able to fix everything.”
No10 and the Treasury are believed to have been wrangling for days about whether to introduce a windfall tax on energy firms following Labour calls for the measure.
Mr Sunak is understood to have finally persuaded the PM to accept the idea yesterday.
A senior Tory source insisted the measure would be tailored to increase revenue without being punitive and jeopardising investment. The source added: “For Conservatives, raising taxes is a means to the end of funding public services and helping those who can’t help themselves.
“The focus of any package will not be on raising taxes as an end in themselves but on what that enables us to do to help people who are suffering.
“Conservatives are always acutely aware that you don’t introduce random taxes that make the economic environment unpredictable. Global companies can go anywhere.”
The Tory source also said the package would help “families who normally would be more than capable of helping themselves” but were left on the brink of being unable to cope by surges in energy prices.
Some Tory MPs are hoping the emergency assistance will be extended widely, with major increases in Universal Credit and a cut to VAT.
But the source added: “The vast majority of support will be directed at those who need it.”
At a news conference last night, Mr Johnson warned that the pandemic had left the Government in a “very difficult fiscal position.” But he insisted the high levels of employment meant the economy was “strong”.
The Prime Minister added: “There is no doubt that, because of the global supply chain, shocks exacerbated by what Vladimir Putin has done in Ukraine, the spike in the price of energy, we’re going to see pressures for a while to come.
“I’ve just got to be realistic with people about that. We’re going to see pressure on household finances.
“So what I’m saying to people is that we will continue to respond just as we have responded throughout the pandemic.
“It won’t be easy, we won’t be able to fix everything.
“But what I would also say is that we will get through it and we will get through it well.”
Hailing the lowest unemployment rate since 1974, Mr Johnson added: “We have a strong labour market, a lot of firms that are looking to hire people and grow. That augurs well for the future.
“There’s no question now that we have pressure on household finances, everybody knows it – everybody can feel it.
“Believe me, the Government is going to do everything we can to help people.”
The need for extra support was highlighted earlier this week when Jonathan Brearley, chief executive of the energy watchdog Ofgem, indicated that the price cap on annual energy bills will rise by around a further £830 to a crippling £2,800 in October.
A Treasury spokesman said: “We understand that people are struggling with rising prices – which is why we’ve provided £22billion of support to date.
“The Chancellor was clear that as the situation evolves, so will our response, with the most vulnerable being his number one priority. He will set out more details tomorrow.”
Environment Secretary George Eustice yesterday said that bringing raging inflation down was key but not straightforward to execute.
He told LBC radio: “We are treading a very difficult path here because if we just borrow lots more money and throw it at the situation we could compound inflation.
“We could make the situation worse and see prices rise further.
“So we have got to try to dampen that inflation and that means showing some restraint but, equally, helping people, particularly those on the lowest incomes, who will struggle with some of these price rises.” Meanwhile, Mr Johnson and Labour leader Sir Keir Starmer clashed on the issue of a windfall tax yesterday.
At Prime Minister’s Questions, Sir Keir said: “It sounds like he has finally seen sense and the inevitable U-turn may finally have arrived.
“So when can people across the country expect him to use those oil and gas profits to bring down their bills?” Mr Johnson replied: “Labour wants to tax business the whole time. Every day, the party wants to put up taxes on business. What we are doing is helping people.”
The PM added: “There is no surprise about Labour’s lust to put up taxes, there is nothing original about that thought.
“Labour members get off on it, they absolutely love to confiscate other people’s assets.
“What we prefer to do is make sure that we have the measures in place to drive investment in our country and drive jobs.”
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